Smartphone downloads to top 6.67 bn by 2014

Mountain View (CA) – Smartphone penetration in the US mobile markets is increasing rapidly, says Frost & Sullivan.

New analysis from Frost & Sullivan, An Insight into the U.S. Smartphone Application Storefront Market, says that smartphone downloads from all app stores will reach 6.67 billion by 2014. The market segments covered in the research include prepaid and postpaid mobile, SMS and MMS, mobile Internet, iPhone, Android, Windows Mobile, Palm, and Symbian.

“Next-generation devices are being introduced at a rapid pace, and stakeholders are offering app stores to facilitate downloads of compelling applications from multiple categories, serving a wide range of communication, entertainment, information, and personalization requirements of the mobile user,” says Frost & Sullivan Industry Analyst Vikrant Gandhi.

“For example, Apple, Google, Nokia, Palm, and Microsoft have either already introduced app stores or are in various stages of app store rollouts and are working to ensure that the entire service experience is compelling for the end user or device owner.”

The company says that the vast majority of applications are available ‘free of cost’ to the end user, significantly driving adoption in the US smartphone app store market. These applications use advanced device capabilities such as touch screen, accelerometers, full Web browsing and location-based services.

But the most significant challenge remains to ensure service differentiation and optimal management of the scale of the app store business, says F&S. App store providers should always be open to support new business models to drive the introduction of innovative services and content types. Having a clear value proposition is also important for mobile operators.

“Unless the app store providers establish exclusivity agreements with application developers – something that is not feasible for a large majority of applications – it will be difficult to provide enough differentiation through the app stores,” notes Gandhi. “The best example of how this could be done is Apple’s app store, in which the entire experience of service purchase and consumption – including device characteristics, form factor and the operating environment – was a radical shift at the time of its introduction.”

This does not mean that services could not be differentiated at all. The moot point then is the extent to which providers are willing to invest in their infrastructure to offer new service to their customers, which then ties back into something that is still being examined – identifying the main purpose of launching the app stores and if app stores alone are strong enough reasons to purchase a particular type of device.

A single participant cannot provide all the services in the mobile content industry. App store providers need to work with multiple application providers and offer them sufficient incentives for their app store initiatives. Services of independent, third-party app store providers such as Handango, Handmark, and PocketGear can also be used to run an app store business profitably with adequate service differentiation.

“For instance, outsourcing or white-labeling of the app store business might become a good idea in the long run since a device vendor or an operating system provider may not want to commit large resources to manage the smartphone app store business,” concludes Gandhi.